Wholesale prices in U.S. increased more than forecast in June

WASHINGTON – Wholesale prices in the U.S. rose more than forecast in June, paced by the biggest jump in fuel costs in a year.

The producer-price index gained 0.5 percent, the most since May 2015, after a 0.4 percent rise the prior month, a Labor Department report showed Thursday in Washington. The median forecast of 64 economists surveyed by Bloomberg called for a 0.3 percent advance. Costs rose 0.3 percent over the past 12 months, the biggest year-to-year gain since December 2014.

As energy costs stabilize and the retraining influence of a strong dollar dissipates, a slowly improving economy will probably lead to a more sustained pickup in price pressures. Federal Reserve officials are monitoring inflation’s progress toward their goal as they consider when to lift interest rates again.

“We’re seeing more signs that the trend is moving up,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd., said before the report. “The drag from the stronger dollar should be fading out of the producer price numbers. The oil price effect is also fading. Ultimately we should see core PPI rising.”

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Separately, the Labor Department reported that jobless claims for the week ended July 9 matched the prior week’s 254,000, holding near the lowest levels in four decades and signaling the labor market remains healthy.

Projections for producer prices ranged from a drop of 0.1 percent to an advance of 0.5 percent, according to the Bloomberg survey of 64 economists.

Energy, food

Energy expenses jumped 4.1 percent, the biggest gain since May 2015, with gasoline increasing 9.9 percent. Food prices rose 0.9 percent, the most since January.

Excluding food and energy, wholesale prices climbed 0.4 percent following a 0.3 percent advance the prior month. Those costs were up 1.3 percent from June 2015.

Excluding food and energy and also eliminating trade services, producer costs rose 0.3 percent after falling 0.1 percent the previous month. Some economists prefer this reading because it strips out the most volatile components of PPI.

One exception to the otherwise strong readings was medical care costs which were little changed in June before adjusting for seasonal variations following, according to the report. These figures are used to calculate healthcare expenses in the Commerce Department’s consumer spending inflation index, the Fed’s preferred price measure.

Health care

Thursday’s report showed those prices have climbed just 1.1 percent in the past 12 months, the smallest year-to-year gain since December.

The producer price gauge is one of three monthly inflation reports released by the Labor Department, the other two being import costs and consumer prices.

Data on Wednesday showed import prices rose 0.2 percent in June, and fell 0.3 percent from the prior month excluding fuel. Economists in the Bloomberg survey forecast that the consumer price index, to be released on Friday, climbed last month.

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